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Sask. joins Newfoundland and Labrador in legal challenge to compensation formula

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Saskatchewan's Attorney General announced that the province of Newfoundland and Labrador will join the federal government in challenging the equalization formula.

On Thursday, two Newfoundland and Labrador cabinet ministers said their province would sue the federal government to force a change to the equalization formula, arguing that the province could lose billions of dollars in the long run.

The lawsuit is expected to be filed in a Newfoundland and Labrador court in the next few weeks.

Saskatchewan has not received any payments under the fiscal equalization program, a federal program that provides funds to some provinces to ensure adequate levels of service across the country, for the past 17 years.

In a post on X (formerly Twitter) published Thursday, Premier Scott Moe said he had asked Bronwyn Eyre, Saskatchewan's justice minister and attorney general, to contact the attorney general of Newfoundland and Labrador to “discuss our province's legal intervention in support of her case.”

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Newfoundland and Labrador is missing out on billions of dollars in compensation payments, say Cabinet ministers John Hogan and Siobhan Coady, and the government is prepared to go to court to change that. The federal government has extended the current compensation formula until 2029, despite the New Zealand government's requests for changes.

Moe has long been critical of the equalization formula. He has called the formula “flawed” in the past and proposed in 2018 that the federal government divide the money given to so-called “needy” provinces among all provinces based on their population.

He is not the first Saskatchewan premier to criticise the payments. In 2007, the NDP government under then-Premier Lorne Calvert filed suit against the equalisation program. However, the program was dropped the following year after the Saskatchewan Party under Brad Wall came to power.

Eyre said Moe's 2018 proposal to change the compensation payments was “inexplicably rejected out of hand”.

“We have been here before, looking for solutions. They have been dismissed, discredited and disregarded,” she told CBC on Friday.

Eyre said she had told Newfoundland and Labrador Justice Minister John Hogan that Saskatchewan would “officially” support the province's lawsuit.

“We join in – we step in. We're proud of it… It's important to emphasize that this is obviously a cross-party effort between two provinces” and between her Saskatchewan Party government and the Liberal government of Newfoundland and Labrador.

Eyre said the province believes it is important to “stand in solidarity behind their case” and that now is the right time to challenge the compensation system.

“A lot has changed over the years and relations with the federal government have deteriorated. There is a growing sense that the equalization formula contains a great injustice” and “represents a tremendous undermining of cooperative federalism,” she said.

A woman with shoulder-length dark hair speaks into microphones.
“Relations with the federal government have deteriorated,” says Justice Minister Bronwyn Eyre. (Adam Bent/CBC)

Eyre said Saskatchewan will act as an intervener and supporter in Newfoundland and Labrador's legal case against the federal Liberal government.

Eyre said the equalization program does not take into account the province's diverse geography and energy needs.

The Moe government has repeatedly described Quebec as largest single beneficiary of compensation paymentsand said the province would receive billions while Saskatchewan would get nothing.

In 2018, Saskatchewan criticized the fact that the equalization calculations did not count hydropower generated in other provinces as “natural resource revenues” – while Saskatchewan’s oil, gas, potash and uranium production did.

“There are crucial fundamental exceptions in the [formula] – for example hydropower in Quebec, which is simply unfair,” said Eyre.

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NDP finance critic Trent Wotherspoon criticized the Saskatchewan Party government for withdrawing the 2007 court case. In his opinion, this would have ensured “fiscal justice for the people of Saskatchewan 16 years ago” and improved the province's fiscal position.

“The Sask. Party simply has zero credibility. They are pure hypocrisy and have achieved nothing when it comes to reconciliation and a fair deal for Saskatchewan,” he said.

A man in a blue suit and white shirt stands in front of a Saskatchewan flag.
Trent Wotherspoon, finance critic for the NDP in Saskatchewan, believes Saskatchewan should take the initiative itself and take action against the fiscal equalization formula. (Alexander Quon/CBC)

With provincial elections coming up this year, Wotherspoon said an NDP government would be willing to file suit.

“The people of Saskatchewan deserve more than to be a marginal figure in the case of others. We should be leaders, and we have been,” he said.